The rule in plain words
None of the values it checks in operational risk can be negative.
EBA checks it for three columns: accounting value (0010), accounting value (0030) and accounting value (0050). And for 19 rows, from net income (0020) to from members belonging to the same IPS (0330). That makes 57 checks. A failure names the one that failed.
How the Line4 Check report words itShowHide
The first of its checks, word for word as the report shows it when it fails. The others read the same, with their own column, row or sheet.
Accounting Value: Interest Income (including from leased assets (Financial & Operating)) >= 0
What to do if your filing fails it
- 01Open the template below and find the cells the rule reads.
- 02Look for a value with the wrong sign in these cells, such as an amount entered as a negative number.
- 03EBA compares the values exactly here: there is no rounding tolerance.
- 04It runs only when your filing indicators mark C 16.02 as reported.
- 05This is a warning. It does not stop the filing on its own, but your authority may ask you to explain it.
The cells it reads
Operational risk - business indicator component (opr BIC) (C 16.02)
Rows
- 0020Net Income
- 0030Interest Income (including from leased assets (Financial & Operating))
- 0040Interest Income
- 0050Income from leased assets (Financial&Operating) other than Interest income
- 0060Profits from leased assets (Financial&Operating)
- 0120Total assets
- 0130Cash balances at central banks and other demand deposits
- 0140Debt securities
- 0150Loans and advances
- 0160Derivatives
- 0170Trading and economic hedges
- 0180Hedge accounting
- 0190Assets subject to leases
- 0210Dividend income
- 0230Other operating income from members belonging to the same IPS
- 0240Profit from non-current assets and disposal groups classified as held for sale not qualifying as discontinued operations
- 0250Other
- 0320Fee and commission income
- 0330of which: from members belonging to the same IPS
Columns
- 0010Accounting Value
- 0030Accounting Value
- 0050Accounting Value
A worked example
The first of its checks, with simple numbers.
Interest income (including from leased assets (financial & operating)), accounting value must then be at least 0.
A file that reports 0 passes. One that reports -100 fails, by 100.
The numbers are illustrative.
Show the rule as writtenShowHide
EBA's formula, as written out for the first of its checks. Cells are written as {template, row, column, sheet}.
{C_16.02,r0030,c0030,} >= 0The next five:
{C_16.02,r0140,c0050,} >= 0{C_16.02,r0180,c0010,} >= 0{C_16.02,r0130,c0030,} >= 0{C_16.02,r0240,c0030,} >= 0{C_16.02,r0320,c0010,} >= 0And 51 more, the same formula for the other cells it covers.
Other rules on C 16.02
- Average value cannot be negative (v903264_s)Warning
- A balancing check on operational risk (row 0110, v903112_m)Warning
- A balancing check on operational risk (row 0200, v90313_m)Warning
- A calculation check on operational risk (v90311_m)Warning
- Net profit or loss applicable to banking book must equal the sum of its five parts (v90310_m)Warning
- Net profit or loss applicable to trading book must equal the sum of its three parts (v90309_m)Warning
- Derivatives must equal trading and economic hedges plus hedge accounting (v90308_m)Warning
- Total assets must equal the sum of its five parts (v90307_m)Warning
Every COREP own funds rule, by template
Checks like this one, run at the point of submission, are the first step to real-time supervision.